So why is the market embracing Blue Nile? In a word: value. With $1.65 in trailing 12-month earnings, NILE came public at just 15 times earnings. At a PE of 19.9 as of Friday's close, the market may well decide it's still cheap.

Net income of $27 million dwarfed capital expenditures of $3.5 million last year, making for a very capital-efficient company. The company had $20 million in cash and no debt - before it raised $32 million in its IPO.

Sales were up 79% last year, and earnings were up more than 1,300%.

The company faces new competition in Amazon.com , but with numbers like that, it's no wonder investors were willing to take the chance.

The Nasdaq climbed 15 to 1912, the S&P 500 gained 4 to 1093, and the Dow rose 29 to 9966. Volume rose to 1.26 billion shares on the NYSE, but declined to 1.39 billion on the Nasdaq. Advancers led 21-10 on the NYSE, and 19-11 on the Nasdaq. Upside volume was 68% on the NYSE, and 74% on the Nasdaq. New highs-new lows were 24-29 on the NYSE, and 36-78 on the Nasdaq.